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by Mike Caswell

The U.S. Securities and Exchange Commission has won an $11-million judgment against Chip Rice, a Minnesota man accused of a scheme involving hundreds of millions of shares. (All figures are in U.S. dollars.) The SEC claimed that Mr. Rice illegally unloaded shares over a four-year period, with his sales amounting to unregistered offerings. The sales included 121 million shares of Grow Solutions Holdings Inc., a Saskatchewan OTC Pink listing that claimed to be developing high-tech vertical farms.

The sanction for Mr. Rice is contained in a judgment handed down on Monday, Sept. 23, in federal court in Minnesota. The $11-million includes disgorgement of $10.1-million in gains, plus interest. The judge has also banned Mr. Rice from penny stocks for three years. The SEC had sought a $1.28-million fine on top of the other penalties, but the judge declined to impose one.

The decision concludes a case in which the SEC accused Mr. Rice of a scheme involving convertible notes of public companies. The SEC said that he essentially bought newly issued shares through the notes, and then unloaded that stock on the market without registering as a broker or dealer. The registration process would have included disclosing backers, any regulatory history and financial information.

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